Ben Thomas, director of strategic marketing for Arch, told USGlass that
while the company may no longer be manufacturing mirror, it will continue
in the mirror market. “Arch is one of the largest suppliers of fabricated
mirror in the country and we continue to see this as an opportunity to
be able to provide a complete package to our growing fabricator base,”
he says. “We will be buying our mirror from fully integrated suppliers
and doing any fabrication required.”

Jeff Leone, CEO of Arch Aluminum & Glass, adds, “We do still fabricate
mirror for customers, but we found that the basic mirror manufacturer
was probably best for those who have a better integrated cost structure—the
companies that make the glass have a better integrated cost structure
and can do it more cost-effectively than a downstream player. It’s still
a big part of our business and I can’t say we’ve lost any business, but
we now have the ability to be more competitive and reliable to customers
from a cost standpoint.”

Jim Ventre, national sales manager for Vitro America, notes that the cost
issues Leone references are being felt throughout the industry.

“The rising cost of raw materials continues to affect our industry. The
most severe problem has been the rising cost of silver,” Ventre explains.
“For a long time it was in the $17 per troy ounce range, but in August
[2010] it began to steadily rise. In April, it spiked to $49, almost a
200-percent increase. This adds a tremendous amount of cost to the production
of mirror; much more than can reasonably be absorbed. Fortunately, though,
all manufacturers have to pay basically the same price for silver, so
no manufacturer has an advantage over another,” Ventre says.

On May 18, Guardian Industries in Auburn Hill, Mich.—which notes that
it is the only float glass company that also manufactures mirrors—issued
a letter to its customers informing them of a silver surcharge for all
mirror products, to be adjusted quarterly. The letter stated, “Silver
is a major component of mirror manufacturing and its cost has more than
tripled over historical levels and pricing remains very volatile.” Vitro
America instituted a similar surcharge the following week.

Domestic Advantages
Despite high costs of production, Guardian’s director of corporate marketing
and brand management, Earnest Thompson, notes the high costs of transportation
make it more advantageous for companies to produce mirror locally. “Guardian
operates 15 mirror lines on five continents with about a third of those
in the U.S.,” Thompson says. “Although there are imports, of course, mirrors
are usually produced locally (as evident in our global mirror assets).
Mirrors are not an item that is cost-effective to ship.”

Ventre notes that the short lead times of producing mirror domestically
can outweigh the importing challenges. “It’s no secret that importing
mirror has huge challenges: lead time can balloon up to 16 or more weeks,
[there are] size limitations due to container constraints, as well as
[little] recourse when product is defective. Few companies have the ability
to deal with the unpredictability of importing product, or can meet the
volume requirements needed,” he says. “In contrast, Vitro AP (and other
domestic mirror manufacturers) can deliver mirrors in a matter of days,
which is required to support a ‘just in time’ inventory control model.
When business is slow, customers want to keep inventory to a minimum,
which is not feasible when importing and dealing with such large minimum
orders and long lead times.”

Mirror Demand?
Although the fabricators admit it’s low at best, one can optimistically
state that mirror demand is moving up.
“We’ve seen a modest pickup in mirror demand over the past year but there
is still significant over-capacity in the system,” Thompson says. “The
U.S. consumes only about one third of the capacity of its installed base.”
He adds, “There is an up-tick in remodeling and our Guardian UltraMirror
product line does quite well in that segment… In addition, we have certain
mirror assets that are used in concentrated solar power applications.”

Ventre emphasizes the “modest” part of the up-tick in recent sales.

“We have experienced some spikes in mirror sales in recent months, but
not nearly what is needed,” Ventre adds. “According to the National Association
of Home Builders new home starts were down 10.6 percent in April and the
confidence level is still low within the home building community. The
Leading Indicator of Remodeling Activity doesn’t give us much to feel
good about these days, as they are projecting spending to increase only
0.02 percent in 2011. It’s difficult to feel truly encouraged until we
see demand consistently trending upward.”

Although the bill seems more concerned with the use of rare earths in
“modern defense technologies,” the rare earth element cerium or compound
cerium oxide has a role in the glass and mirror industry.

“Cerium oxide is used in cleaning the glass before it goes through the
silvering process,” explains Jim Ventre, national sales manager for Vitro
America. Rare earth supplier Molycorp Minerals in Mountain Pass, Calif.,
notes that cerium oxide is used in the glass industry for polishing compounds,
optical glass, UV-resistant glass, X-ray imaging, thermal control mirrors,
and colorizers/decolorizers.

The problem, as elaborated upon in the House bill, is that “Though at
least 40 percent of the world’s rare earth reserves are located within
the United States and its ally nations, our country now depends upon imports
for nearly 100 percent of its rare earth needs.” The bill further notes,
“[M]ore than 97 percent of all rare earths for world consumption is produced
in China.
The ability—and willingness—of China to export these rare earths is eroding
due to its growing domestic demand …”

The Chinese Ministry of Industry and Information Technology draft rare
earths plan through 2015 proposed an immediate ban on the export of so-called
“heavy” rare earths, and a restriction on the exports of light rare earth
metals. In July 2010, China decreased its export quota allocations on
rare earth oxides and metals by more than 70 percent, causing price increases
and supply shortages of some materials. In October 2010, the Chinese government
reportedly restricted export of all rare earth oxide and metal to the
United States and Europe.

While several companies around the world are beginning the process of
reopening their mines, alternatives to the metals are being sought now.

“At this time, we have not found an alternative for cerium oxide,” Ventre
says.
Guardian Industries in Auburn Hill, Mich., manufactures its own mirror
line, and Earnest Thompson, director of corporate marketing and brand
management, notes, “We have several mirror lines that use non-metal oxide
abrasives.”

Still, the cerium oxide composed polisher remains the most common solution,
and mirror fabricators are seeking additional alternatives. The Glass
Association of North America’s Mirror Division has organized a task group
to discuss this issue (see May 2011 USGlass, page 40).

As of press time, the bill was awaiting review by the House Subcommittee
on Energy and Environment.